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Government Procurement CHAPTER 13 GOVERNMENT PROCUREMENT Article 13.1: Definitions For the purposes of this Chapter: build-operate-transfer contract and public works concession contract means a contractual arrangement the primary purpose of which is to provide for the construction or rehabilitation of physical infrastructure, plants, buildings, facilities, or other government-owned works and under which, as consideration for a supplier’s execution of a contractual arrangement, a procuring entity grants to the supplier, for a specified period of time, temporary ownership or a right to control and operate, and demand payment for the use of those works for the duration of the contract; commercial goods or services means goods or services of a type generally sold or offered for sale in the commercial marketplace to, and customarily purchased by, non-governmental buyers for non-governmental purposes; construction service means a service that has as its objective the realization by whatever means of civil or building works, based on Division 51 of the United Nations Provisional Central Product Classification (CPC); in writing or written means any worded or numbered expression that can be read, reproduced and may be later communicated, and may include electronically transmitted and stored information; limited tendering means a procurement method whereby the procuring entity contacts a supplier or suppliers of its choice; multi-use list means a list of suppliers that a procuring entity has determined satisfy the conditions for participation in that list, and that the procuring entity intends to use more than once; notice of intended procurement means a notice published by a procuring entity inviting interested suppliers to submit a request for participation, a tender, or both; offset means any condition or undertaking that requires the use of domestic content, a domestic supplier, the licensing of technology, technology transfer, investment, counter-trade, or similar action to encourage local development or to improve a Party’s balance of payments accounts; open tendering means a procurement method whereby all interested suppliers may submit a tender; procuring entity means an entity listed in Annex 13-A; 13-1 qualified supplier means a supplier that a procuring entity recognizes as having satisfied the conditions for participation; selective tendering means a procurement method whereby the procuring entity invites only qualified suppliers to submit a tender; services includes construction services, unless otherwise specified; supplier means a person or group of persons that provides or could provide a good or service to a procuring entity; and technical specification means a tendering requirement that: (a) sets out the characteristics of: (i) goods to be procured, including quality, performance, safety, and dimensions, or the processes and methods for their production, or (ii) services to be procured, or the processes or methods for their provision, including any applicable administrative provisions; or (b) addresses terminology, symbols, packaging, marking, or labelling requirements, as they apply to a good or service. Article 13.2: Scope Application of Chapter 1. This Chapter applies to any measure regarding covered procurement. 2. For the purposes of this Chapter, covered procurement means government procurement: (a) of a good, service, or any combination thereof as specified in each Party’s Schedule to Annex 13-A; (b) by any contractual means, including: purchase; rental or lease, with or without an option to buy; build-operate-transfer contracts and public works concessions contracts; (c) for which the value, as estimated in accordance with paragraphs 9 and 10, equals or exceeds the relevant threshold specified in a Party’s Schedule to Annex 13-A, at the time of publication of a notice of intended procurement; 13-2 (d) by a procuring entity; and (e) that is not otherwise excluded from coverage under this Agreement. 3. This Chapter applies only as between Mexico and the United Sates. Accordingly, for the purposes of this Chapter, “Party” or “Parties” means Mexico or the United States, singly or collectively. Activities Not Covered 4. Unless otherwise provided in a Party’s Schedule to Annex 13-A, this Chapter does not apply to: (a) the acquisition or rental of land, existing buildings or other immovable property or the rights thereon; (b) non-contractual agreements or any form of assistance that a Party, including its procuring entities, provides, including cooperative agreements, grants, loans, equity infusions, guarantees, subsidies, fiscal incentives, and sponsorship arrangements; (c) the procurement or acquisition of: fiscal agency or depository services; liquidation and management services for regulated financial institutions; or services related to the sale, redemption and distribution of public debt, including loans and government bonds, notes and other securities; (d) public employment contracts; and (e) procurement conducted: (i) for the specific purpose of providing international assistance, including development aid, (ii) under the particular procedure or condition of an international agreement relating to the stationing of troops or relating to the joint implementation by the signatory countries of a project, or (iii) under the particular procedure or condition of an international organization, or funded by international grants, loans, or other assistance if the applicable procedure or condition would be inconsistent with this Chapter. 13-3 Schedules 5. Each Party shall specify the following information in its Schedule to Annex 13-A: (a) in Section A, the central government entities for which procurement is covered by this Chapter; (b) in Section B, other entities for which procurement is covered by this Chapter; (c) in Section C, the goods covered by this Chapter; (d) in Section D, the services, other than construction services, covered by this Chapter; (e) in Section E, the construction services covered by this Chapter; (f) in Section F, any General Notes; (g) in Section G, the applicable Threshold Adjustment Formula; and (h) in Section H, the publication information required under Article 13.5.2 (Publication of Procurement Information). Compliance 6. Each Party shall ensure that its procuring entities comply with this Chapter in conducting covered procurements. 7. No procuring entity shall prepare or design a procurement, or otherwise structure or divide a procurement into separate procurements in any stage of the procurement, or use a particular method to estimate the value of a procurement, in order to avoid the obligations of this Chapter. 8. Nothing in this Chapter shall be construed to prevent a Party, including its procuring entities, from developing new procurement policies, procedures or contractual means, provided that they are not inconsistent with this Chapter. Valuation 9. In estimating the value of a procurement for the purposes of ascertaining whether it is a covered procurement, a procuring entity shall include the estimated maximum total value of the procurement over its entire duration, taking into account: (a) all forms of remuneration, including any premium, fee, commission, interest or other revenue stream that may be provided for under the contract; 13-4 (b) the value of any option clause; and (c) any contract awarded at the same time or over a given period to one or more suppliers under the same procurement. 10. If the total estimated maximum value of a procurement over its entire duration is not known, the procurement shall be deemed a covered procurement, unless otherwise excluded under this Agreement. Article 13.3: Exceptions 1. Subject to the requirement that the measure is not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail, or a disguised restriction on international trade between the Parties, nothing in this Chapter shall be construed to prevent a Party, including its procuring entities, from adopting or maintaining a measure: (a) necessary to protect public morals, order, or safety; (b) necessary to protect human, animal, or plant life or health; (c) necessary to protect intellectual property; or (d) relating to the good or service of a person with disabilities, of philanthropic or not- for-profit institutions, or of prison labor. 2. The Parties understand that subparagraph 1(b) includes environmental measures necessary to protect human, animal, or plant life or health. Article 13.4: General Principles National Treatment and Non-Discrimination 1. With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party, treatment no less favorable than the treatment that the Party, including its procuring entities, accords to domestic goods, services, and suppliers. 2. With respect to a measure regarding covered procurement, no Party, including its procuring entities, shall: (a) treat a locally established supplier less favorably than another locally established 13-5 supplier on the basis of degree of foreign affiliation or ownership; or (b) discriminate against a locally established supplier on the basis that the good or service offered by that supplier for a particular procurement is a good or service of the other Party. 3. All orders under contracts awarded for covered procurement shall be subject to paragraphs 1 and 2 of this Article. Procurement
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